Commodities Mixed as US GDP Misses Estimates, Spain Downgraded

Turning to Europe, Standard & Poor’sslashed Spain’s sovereign debt rating to BBB plus from A, adding a negative outlook due to increased risks of government debt, challenging economic conditions, and the possibility of more support being needed to help the country’s banking sector.

The Bank of Japan expanded its plan for government bond purchases by 10 trillion yen amid growing concerns among legislators and voters alike about a slowdown in economic growth. After much speculation, the Japanese central bank confirmed it will be increasing its asset-purchase fund to 40 trillion yen by June 2013, having earlier set the target at 30 trillion yen by the end of 2012.

In early morning trading Friday, Brent crude is 0.2 percent weaker at $119.65 a barrel. Copper is up 0.8 percent at $3.80 a pound and gold is flat at $1,660.30 an ounce.

Oil

A number of major oil producers reported their latest earnings results this week, including Royal Dutch Shell (LSE:RDSA), which posted a net income of $7.66 billion, up eleven percent from a year ago. The London-based group raised its target for asset sales this year to $4 billion from its earlier projection of $2 billion to $3 billion.

PetroChina (HKEX:0857) reported first quarter net income rising 5.8 percent from a year ago to 39.2 billion yuan amid increased oil and gas production. In contrast, rival Sinopec (HKEX:0386) reported net income tumbling 35 percent to 13.4 billion yuan during the same period due to losses from processing crude oil.

As for Toronto-based Eco (Atlantic) Oil and Gas (TSXV:EOG), it has strengthened its presence in Namibia by signing joint operating agreements with the National Petroleum Corporation of Namibia (NAMCOR) regarding its five license blocks onshore and offshore of the country.

Copper

There is growing concern that S&P’s latest downgrade of Spanish debt will weigh on copper prices moving forward. Furthermore, concerns are mounting over how China’s plans to close down inefficient copper operations may impact supply and demand of the red metal on the global market.

For now, Canada’s Inmet Mining (TSX:IMN,OTC Pink:IEMMF) has posted a 62 percent increase in the latest quarter to 96.1 million Canadian dollars on the back of increased copper output. Inmet’s red metal output rose 40 percent on year to 24,800 tonnes due to more production at its Las Cruces mine in Spain and its Cayeli mine in Turkey.

As for China’s Jiangxi Copper (HKEX:0358), company spokesman Pan Qifang said that Jiangxi will upgrade 50,000 tonnes of outdated copper smelting capacity in Sichuan province, which will lead its capacity to double when it is completed in one to two years.

Toronto’s NWM Mining (TSXV:NWM,OTC Pink:NWMMF) said it has agreed to settle legal action relating to a copper recovery SART plant built at its Mexican mine site. Under the agreement, NWM will pay BioteQ Environmental Technologies (TSX:BQE,OTC Pink:BTQNF) $1.3 million in cash over a two-year period, while BioteQ will retain ownership of the treatment plant and demobilize it from NWM’s site.

Gold

Bullion buying by central banks should provide steady support to gold prices. According to the International Monetary Fund, Russia, Turkey, and Mexico added about 44.8 metric tons of gold valuing $2.4 billion to their reserves in March.

Newmont Mining (NYSE:NEM) has reiterated that its gold production for 2012 will reach between 5 million and 5.2 million ounces. However, the company pointed out that the risks at its Conga mine in Peru could undermine its latest projection. Last week, auditors said that Newmont should consider leaving two lakes intact and increase water levels at its planned artificial reservoirs at the $4.8 billion Conga mine. Newmont is maintaining that its capital expenditure outlook for the year will reach between $4 billion and $4.3 billion on a consolidated basis.

Barrick Gold (NYSE:ABX,TSX:ABX) completed the sale of over 66 million ordinary shares in Highland Gold (LSE:HGM), which represents Barrick’s entire holding in the company and over 20 percent of Highland’s issued share capital.

Duncan Park Holdings (TSXV:DPH,OTCQX:DCNPF) said that it was able to complete most of its planned winter core drilling at its Red Lake gold camp.

Securities Disclosure: I, Shihoko Goto, hold no direct investment interest in any company mentioned in this article.